Plaintiff's claim, defendant's counterclaim, and defendant's third party claim against third party defendant came on to be heard before the Court sitting without a jury. Upon consideration of the briefs submitted by all parties both before and after the trial, and the evidence presented and arguments made in open court, the Court has reached the following conclusions, which shall be considered as findings of fact and conclusions of law pursuant to Rule 52(a), Federal Rules of Civil Procedure.

Plaintiff is a corporation engaged in the business of promoting, publishing, selling and distributing a book under the trade name of 'Showtime -- d.c.' (hereinafter referred to as 'Showtime Book'), which contains various coupons which, when presented to the box office of the entertainment facilities listed on such coupon, entitled the holder to one free admission when accompanied by a guest who purchases a ticket of equal value at regular prices.

Defendants are corporations which own and operate two motion picture theatres in the District of Columbia: the Trans-Lux Playhouse at 727 15th Street, N.W., and the Trans-Lux Theatre at 736 14th Street, N.W. Both defendants are part of a chain of seventeen theatres individually operated by seventeen affiliated companies in Baltimore, Philadelphia, New York City, Boston, Detroit, and Washington, D.C. All of the affiliated companies, including the two defendants, have their home offices in New York City.

Third party defendant, Edwin Rosenfeld, was district manager for the two defendant corporations in the Baltimore-Washington area at all pertinent times.

On November 21, 1963, Rosenfeld signed an 'Advertising Agreement' between plaintiff and 'Trans-Lux Theatres,' by which plaintiff, at its own expense and without charge to Trans-Lux, would print and insert in its Showtime Book six coupons, three for the Trans-Lux Theatre and three for the Trans-Lux Playhouse. Each of these tickets entitled the holder to one free admission 'when accompanied by a guest who purchases one (admission) at regular price.' It was stated in the agreement that Trans-Lux Theatres authorized these six insertions 'with the understanding that not more than 5,000 (Showtime Books) will be sold.' It was further stated that the theatres agreed to honor all coupons presented, and that plaintiff would pay all advertising, printing and other costs incidental to the sale of the Showtime Book. Each book was to be marked to expire one year from date of sale to the purchaser. In fact, the books which were printed and offered for sale noted on the tickets for defendants' theatres that the offer was 'good thru October 31, 1964.' Rosenfeld signed the agreement as 'Owner, Partner or Authorized Agent.' Daniel D. Richard, plaintiff's general manager, signed for plaintiff.

On December 17, 1963, following an extensive advertising campaign in Washington newspapers to promote the Showtime Book,
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plaintiff received the following telegram from Thomas E. Rodgers, vice president of each defendant (and of all of the other affiliated theatres), sent from New York City:

In the above circumstances, Rosenfeld in fact may have had actual authority to enter into the agreement with plaintiff. He offered credible testimony that he in fact sent a memorandum to the New York office after his initial conversations with Richard explaining the Showtime Book program and saying that he thought it would be good to go ahead with it. He received no answer from New York, and the New York office did not find such a memorandum in its files. Whether or not defendants received this memorandum and whether or not Rosenfeld had such actual authority are not questions which this Court need decide, because it is abundantly clear to the Court that Rosenfeld has apparent authority to enter the agreement on behalf of defendants.

The Court agrees with defendants in their statement of the law governing apparent authority: A third party's binding of a principal by the apparent authority of his agent rests essentially on estoppel. A third party seeking to hold a principal on the apparent authority of the agent must show acts or statements of the principal known to the third party and on which the third party reasonably relied to his detriment. However, no specific, positive and intentional act or representation by a principal concerning his agent's authority is necessary to give the agent apparent authority to perform a specific act. 'The apparent authority of an agent to perform an act may also arise by placing him in a position which causes a third person to reasonably believe that the principal had consented to the exercise of authority the agent purports to hold. This falls short of an overt, affirmative representation by a principal.' Drazin v. Jack Pry, Inc., 154 A.2d 553, 554 (D.C.Mun.App.1959). 'The apparent authority of an agent arises when the principal places the agent in such a position as to mislead third persons into believing that the agent is clothed with authority which in fact he does not possess.' Jack Pry, Inc. v. Drazin, 173 A.2d 222, 223 (D.C.Mun.App.1961). 'Where one person knowingly permits another without objection to represent him, or puts the other in a situation which indicates to those who deal with him that he holds a certain authority, the former is estopped from asserting, against those who relied upon the appearance of power thus permitted or given, that the putative agent was not 'acting within the actual limits of his authority." Crane v. Postal Tel. Cable Co., 48 App.D.C. 54, 61 (1918). A principal is charged with knowledge of his agent's conduct, not only by what he knows, but also by what he would have ascertained if he had used ordinary care in looking after the conditions of the business affairs in which the agent was engaged. Crane, supra at 61-65. 'One may be bound by the misrepresentation of his agent, if it is made in the exercise of his apparent authority, and relates to the matter intrusted to his management or control, and the party dealt with has no knowledge of the misrepresentation.' Crook v. International Trust Co., 32 App.D.C. 490, 507 (1909).

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